Facebook is working on a broad licensing arrangement with the music industry that greenlights user-generated videos with songs — and potentially professional music content too, Bloomberg reports.
This follows the recent news of Facebook hiring Tamara Hrivnak, a key music executive at YouTube, to lead its global music strategy and business development.
Parties on both sides of the negotiating table stand to benefit if a deal can be reached. For Facebook, music videos are a lucrative and low-hanging fruit towards greater ad revenue. Music industry stakeholders would also gain from this (if a revenue share program is in place), as well as from the additional licensing fees that Facebook would pay out to them.
If Facebook makes a meaningful entry into music streaming, it could scupper video-oriented music services, such as:
- Vevo. The Sony- and Universal Music-owned service seems to be one of the most threatened by Facebook’s move. Music videos, which Facebook seems focused on, are Vevo’s strongest point of differentiation and its main magnet to draw in users to its platform. Moreover, last summer, Vevo revamped to focus on becoming more social — something Facebook clearly excels at already.
- YouTube. Music is YouTube’s most popular channel, with 96 million subscribers, ahead of Gaming (77 million) and Sports (75 million). Music videos are also important to the site — all but two of YouTube’s top 25 most-viewed videos are music videos. Indeed, Vevo relies heavily on YouTube for viewership, which is partly why it redesigned its site last summer.
On the other hand, Facebook’s venture into music streaming is less likely to harm audiocentric sites. Because they focus predominantly on an audio streaming, services like Spotify, SoundCloud, and Apple Music won’t be as directly affected by Facebook’s push into music. Nevertheless, Facebook could inhibit these companies’ business as far as their video ambitions are concerned.
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